Harriets Hats
EXAM 1
Additional Review Problems
Adjusting Entries:
1. A year-end physical count of office supplies on hand reveals supplies worth $1,800. The balance sheet reflected a balance in the office supplies account of $3,700 before any year-end adjustments were made. What is the amount of supplies expense that will be included on the current year income statement?
2. On December 1, 20Y1, Nelson collected rent of $7,200 (for December, January, and February rent) from a tenant renting some space in its warehouse and credited Unearned Rent Revenue for the entire amount. What is the balance sheet value of Unearned Rent Revenue on 12/31/Y1?
3. On July 31, 20Y1, Smith Company paid $10,200 to rent warehouse space for the period 7/31/Y1 to 7/31/Y2. This warehouse space was also rented from 7/31/Y0 to 7/31/Y1. Smith’s 1/1/Y1 balance sheet reflected a balance in the
Prepaid Rent account relating to this warehouse of $5,775. Determine the amount of rent expense that would appear on
Smith’s 20Y1 income statement.
EXAM 1 REVIEW | PAGE 1
Reporting Special Income Items
Plush Textiles had a beginning balance in its retained earnings account of $580,000 on January 1, 20Y1. Income from
Continuing Operations (before-tax) was $225,000 for 20Y1. The company’s tax rate is 30% for all years presented. Following is a list of special items that have not been considered in the amounts above. All amounts are before taxes:
Extraordinary gain
Correction of a 20Y0 revenue understatement
Loss from operations of a discontinued textiles division
Gain on sale of the textiles division
Omission of depreciation charges from January and February 20Y1
$31,000
$50,000
$22,000
$60,000
$10,000
Prepare a partial income statement for 20Y1 starting with Income From Continuing Operations before Taxes.
What is the 12/31/Y1 balance in the Retained Earnings account?
EXAM 1 REVIEW | PAGE 2
Change in Accounting Principle
Tom Zuluaga Company began
Additional Review Problems
Adjusting Entries:
1. A year-end physical count of office supplies on hand reveals supplies worth $1,800. The balance sheet reflected a balance in the office supplies account of $3,700 before any year-end adjustments were made. What is the amount of supplies expense that will be included on the current year income statement?
2. On December 1, 20Y1, Nelson collected rent of $7,200 (for December, January, and February rent) from a tenant renting some space in its warehouse and credited Unearned Rent Revenue for the entire amount. What is the balance sheet value of Unearned Rent Revenue on 12/31/Y1?
3. On July 31, 20Y1, Smith Company paid $10,200 to rent warehouse space for the period 7/31/Y1 to 7/31/Y2. This warehouse space was also rented from 7/31/Y0 to 7/31/Y1. Smith’s 1/1/Y1 balance sheet reflected a balance in the
Prepaid Rent account relating to this warehouse of $5,775. Determine the amount of rent expense that would appear on
Smith’s 20Y1 income statement.
EXAM 1 REVIEW | PAGE 1
Reporting Special Income Items
Plush Textiles had a beginning balance in its retained earnings account of $580,000 on January 1, 20Y1. Income from
Continuing Operations (before-tax) was $225,000 for 20Y1. The company’s tax rate is 30% for all years presented. Following is a list of special items that have not been considered in the amounts above. All amounts are before taxes:
Extraordinary gain
Correction of a 20Y0 revenue understatement
Loss from operations of a discontinued textiles division
Gain on sale of the textiles division
Omission of depreciation charges from January and February 20Y1
$31,000
$50,000
$22,000
$60,000
$10,000
Prepare a partial income statement for 20Y1 starting with Income From Continuing Operations before Taxes.
What is the 12/31/Y1 balance in the Retained Earnings account?
EXAM 1 REVIEW | PAGE 2
Change in Accounting Principle
Tom Zuluaga Company began